Breaking Open Piggy Bank, Apple Unveils Dividend, $10 Billion Buyback

Bowing to serious shareholder pressure, Apple disclosed plans on Monday to return $45 billion to shareholders over the next three years by paying a quarterly dividend and buying back shares.

The moves represent a dramatic change for the iPad and iPhone maker, which had for years resisted calls to return shares. But Apple’s enormous success and a lack of acquisition targets left the company with about $100 billion on its balance sheet.

Apple said it plans to initiative a quarterly dividend of $2.65 a share sometime in its fiscal fourth quarter. The company also said its board of directors has signed off on a $10 billion plan to buy back shares beginning in its fiscal 2013. The two moves will return about $45 billion to shareholders.

“Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business," CEO Tim Cook said in a statement.

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Hayong Yun, a finance professor at Norte Dame, said paying out a dividend can be “good news for Apple shareholders because it reduces the risk of Apple management misusing cash.”

However, Yun noted Apple’s shares didn’t leap on the news. “One possibility for this is the market’s perception of Tim cook’s vision of Apple: taking a less innovative course and hence need less cash in the future," Yun said.